Correlation Between Sartorius Stedim and Urban Outfitters

Can any of the company-specific risk be diversified away by investing in both Sartorius Stedim and Urban Outfitters at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sartorius Stedim and Urban Outfitters into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sartorius Stedim Biotech and Urban Outfitters, you can compare the effects of market volatilities on Sartorius Stedim and Urban Outfitters and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sartorius Stedim with a short position of Urban Outfitters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sartorius Stedim and Urban Outfitters.

Diversification Opportunities for Sartorius Stedim and Urban Outfitters

0.29

Correlation Coefficient

Sartorius Stedim  Urban Outfitters

Modest diversification

The 3 months correlation between Sartorius and Urban is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sartorius Stedim Biotech and Urban Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban Outfitters and Sartorius Stedim is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sartorius Stedim Biotech are associated (or correlated) with Urban Outfitters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban Outfitters has no effect on the direction of Sartorius Stedim i.e., Sartorius Stedim and Urban Outfitters go up and down completely randomly.

Pair Corralation between Sartorius Stedim and Urban Outfitters

Assuming the 90 days trading horizon Sartorius Stedim Biotech is expected to generate 0.71 times more return on investment than Urban Outfitters. However, Sartorius Stedim Biotech is 1.4 times less risky than Urban Outfitters. It trades about 0.34 of its potential returns per unit of risk. Urban Outfitters is currently generating about 0.22 per unit of risk. If you would invest  18,215  in Sartorius Stedim Biotech on October 25, 2024 and sell it today you would earn a total of  2,165  from holding Sartorius Stedim Biotech or generate 11.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sartorius Stedim Biotech  vs.  Urban Outfitters

Sartorius Stedim Biotech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sartorius Stedim Biotech are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sartorius Stedim may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Urban Outfitters

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Outfitters are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Urban Outfitters reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sartorius Stedim and Urban Outfitters

The main advantage of trading using opposite Sartorius Stedim and Urban Outfitters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sartorius Stedim position performs unexpectedly, Urban Outfitters can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Urban Outfitters will offset losses from the drop in Urban Outfitters' long position.

The idea behind Sartorius Stedim Biotech and Urban Outfitters pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.